Oil supply disruptions in Libya have escalated in past weeks, further increasing concern in Europe over its energy supply. This was due to protests, blockades and shutdowns at key oil infrastructure in the unstable country, as only 650,000 b/d in oil was pumped in June, which is the lowest level since October 2020 and meant output had been slashed in half.
Earlier this week, Libya’s state-owned National Oil Corp. did lift force majeure on the eastern oil terminals of Zueitina and Brega, easing the situation somewhat.
The protests were backed by the Libyan National Army, led by Khalifa Haftar, who controls most of Libya’s oil and gas infrastructure but does not control sales and the distribution of revenue. The faction supports the Government of National Stability in the East of the country. Since 2019, Haftar can rely on support by Russia’s Wagner paramilitary group, enabling Russia to influence these energy flows to Europe.
#Libya’s Political Chaos is Worsening a Global Oil Supply Crisis
Rival prime ministers are vying to take control of the country
Country’s production might drop to zero, says Rapidan Energy#ootthttps://t.co/ec9kkGhtnM
— Giovanni Staunovo🛢🇮🇹 (@staunovo) July 13, 2022
The UN-backed Government of National Unity (GNU) is based in the capital, Tripoli, in the West of the country, and is led by interim PM Abdulhamid Dbeibeh. However, the majority of Libya’s oil fields and infrastructure are located in the east of the country.
The United States have proposed a mechanism to supervise Libya’s oil revenues, in a bid to end the political crisis which is disrupting production. Even if Libyan political parties have agreed in principle on it, a final agreement has not yet been reached.
Last week, there were also rumours that the government in Tripoli was also considering to cut gas exports to Italy, which would gravely aggrevate Europe’s gas shortages, but this was quickly denied.
Writing in Foreign Policy, Robert Uniacke, a senior Middle East and North Africa analyst at Navanti Group, an analytics firm, argues that “Libya Could Be Putin’s Trump Card”, writing:
“Global oil markets have already felt the pinch of Libyan oil shutdowns helped along by Russian mercenaries. (…)
Russia has maneuvered itself into a position where it has cheap, plausibly deniable operators who both are essential to the survival of a key Libyan actor and boast significant autonomous capabilities at NATO’s backdoor. This strategic card may ultimately prove more important to Russian President Vladimir Putin than his struggles in Ukraine.
(…)
European Union leaders have expressed interest in investing in Libyan energy infrastructure to reduce dependence on Russian gas, but Wagner’s presence positions the Kremlin as a spoiler in these future calculations—or at least a card to play in negotiations. In addition to threatening NATO’s southern flank with a multipronged deployment—particularly as many oil facilities come equipped with the runways and infrastructure to offer some military utility—Wagner’s stance atop Libya’s prized low-sulfur sweet crude reserves has provided the Kremlin with the strategic depth to squeeze European customers. This comes amid tight global energy markets since the invasion of Ukraine and Europe’s impending winter gas supply crisis. (…)
The shutdown, even without direct involvement, should come as a wake-up call to NATO member states concerned about Russia’s political and economic power projection on its borders. It underscores how, in recent years, the Kremlin has seized an opportunity to become an insurmountable actor in Libya’s political trajectory. Weaving itself into the security architecture of the LNA, Wagner helps perpetuate and accelerate trends that harm European interests.”
Libya's NOC chief ignores government order firing him https://t.co/jvwBxgD48f
— Jalel Harchaoui (@JMJalel_H) July 13, 2022
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